Dubai Debt: Dubai Financial Crisis To Hit All Countries
- Dubai Debt: Dubai Financial Crisis To Hit All Countries.
Dubai is stuck with a glut of real estate that no one wants to buy or rent.
Creditors and markets had always assumed that when push came to shove, its oil-rich neighbor Abu Dhabi would bail out Dubai.
Sheikh Ahmed bin Saeed al-Maktoum, chairman of the Supreme Fiscal Committee said, “Our intervention in Dubai World was carefully planned and reflects its specific financial position.”
He added that “further information will be made available early next week.”
Dubai might not be able to pay its bills sent a wave of uncertainty rippling through markets just as investors thought the worst of the global financial instability was over.
On Wednesday, as Dubai asked lenders for a six-month reprieve on payments for about 60 billion U.S. dollars in debt, investors were worried that the debt problems in the middle-east emirate would spill over to the world, hampering the global economic recovery. Due to this, Confidence of Western investors across the Gulf has been shaken.
“Whether you are Dubai, Greece, Spain, Ireland or the U.K., you can print as much money as you want, but at the end of the day you have to pay the interest on your debt.”
Light, sweet crude for January delivery finally dropped 1.91 dollars, or 2.5 percent, to settle at 76.05 dollars a barrel on the New York Mercantile Exchange.
Dubai has seen a surge in extravagant building projects, with vast skyscrapers springing up in the desert state, but it has suffered in the global financial crisis. Most of its debt is held by state-backed companies.
During this recession, one more crisis to hamper the world’s growth, after all, this is advanced globalization where every country is interconnected.
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